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Markets Pulse

Euro Zone Inflation Falls Sharply, Unemployment Hits Record

By Alex Brittain

The euro zone’s annual inflation rate fell to its lowest in almost two years in November, while a rise in joblessness in the countries at the heart of the region’s fiscal crisis pushed unemployment to record levels, official data showed Friday.
The figures underscore the weakness in the euro-zone economy, which is making it harder for governments to extricate themselves from their debt crisis because falling tax revenue and rising welfare payments are pushing up public borrowing.
The data will also put pressure on the European Central Bank to ease monetary policy further at its monthly meeting next week.
Eurostat, the European Union’s statistics agency, said the annual rate of consumer price growth in the 17 nations that use the euro fell to 2.2% in November from 2.5% in October. The decline brings inflation close to the ECB’s target rate of a little below 2.0%. Economists in a Dow Jones Newswires poll last week had expected a more gradual slowdown to 2.4%.
Eurostat said unemployment in the euro zone rose to 11.7% of the work-eligible population, the highest rate since records began in 1995. Some 173,000 people lost their job in October, the biggest month-to-month rise since June.
The figures lay bare the divisions at the heart of the euro zone as the rise was limited almost entirely to the southern, more highly indebted countries at the center of the debt crisis.
Joblessness rose in Spain, Greece, Italy, Portugal and Cyprus, among others. It fell in Austria and held steady in Germany, France and Finland.